Daily digest market movers: Australian Dollar gains on US CPI figures and RBA signals
- RBA Assistant Governor Sarah Hunter's comments supported the RBA's case against near-term policy rate cuts, which boosted the AUD. Hunter commented that the labor market is still tight relative to full employment, which reiterated the bank’s hawkish stance.
- On the US side, CPI declined to 2.5% YoY, below the consensus estimate of 2.7% and the previous reading of 2.9%.
- Core CPI, which excludes volatile food and energy prices, rose 3.2% YoY, matching the market expectation and July's increase.
- On a monthly basis, the CPI increased 0.2%, while the core CPI rose above consensus to 0.3%.
- Money market futures traders have slashed the odds for a 50 bps rate cut by the Fed to 15% and increased the probability of a 25 bps cut to 85%.
- Despite its hawkish stance, the RBA is likely to join the global easing cycle later this year due to weak underlying economic activity and lower inflation pressure.
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